BA and Iberia in merger talks

British Airways and Iberia, the Spanish flag carrier, have announced that they are in talks over a merger. The boards of both airlines are supporting the negotiations, which come after a failed attempt by a BA-led consortium to buy Iberia last year.

A merger would see the companies form a holding company but it is understood that both the BA and Iberia brands would be retained. The arrangement could be similar to that which saw Air France and KLM merge in 2004.

The combined airline will have a strong presence across both the North and South Atlantic, due to BA’s strength in the US and Iberia’s connections in South America.

British Airways chief executive Willie Walsh says: “The aviation landscape is changing and airline consolidation is long overdue. The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.

“We’ve had a successful relationship with Iberia for a decade and are confident that both companies’ shareholders would benefit from the proposed tie-up.”

British Airways acquired a 9% shareholding in Iberia in 1999 and has since increased its stake to 13.15%. Iberia has announced today that it has recently acquired a 2.99% direct shareholding in British Airways with an option to buy more.

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